Interpreting Candlestick Chart Patterns
One of the traders aids in developing formulas of candlestick charts are the candlestick patterns. They are quite essential when one is engaged in the creation of basic systems that help indicate a trend formation so you can commence trading.
Candlesticks have a formation that exhibits the open, high, low and closing price of a currency, stock or commodity over a time frame. You can basically choose the stretch of time that you want to show.
The popular time period is 5 minutes but you may choose in particular situations to take 15 minutes. Usually, longer periods are exercised for longer term trading.
The body of the candle points the difference between the open and close prices. If it is white (or green/blue on a colored chart) the open is the lower boundary of the elongated body and the price marked up during the period you are reckoning. If it is black (or red on a colored chart then the opening price is the top boundary and the price tumbled.
In candles, vertical lines poking up from the top and down from the bottom are known as wicks. The highest rate ever accomplished during the period is the top of the upper wick section. Contrastingly, the lowest rate is the bottom of the lower wick component.
The blessing of this method of analysis is that the trader can without delay see whether prices rose or fell over the period. A white or green candle exposes a rising price or bearish tendency and a black or red candle illustrates a abating price or bullish tendency.
The relationship of open and close values to high and low values can be noted quickly. Then there is a solid candle without a wick.
The name for this is Marubozu pattern. This illustrates that the opening and closing prices were never approached in either direction by the low and high rates.
The high value as opening price and low value as closing price is marked by the red or black candle. Adversely, green or white candle indicates the low was the opening price while the high was the closing price.
A long body means a relatively constant movement either up or down. A lengthy wick detected on either bottom or top would denote a reversal.
A candlestick has to be read along with the previous ones in order to ensure accurate trending. From there relatively intricate trends can be built to exemplify the trends in the future.
About the Author
Previous Article - Next Article
Add Your Picture
Article Submitted By:
Brad Morgan
Subscribe To: Brad Morgan Rss Feed
This Article Has Been Read 140 Times
Publish/Share this article
Remember: The article body, title, author bio and links may not be changed or removed. By publishing this article, you agree to all the terms in our Terms of Service.
Rating: Not yet rated
More articles in this Category
Forex trading with Meta trader 4
How To Best Learn Forex
Are You a Forex Newbie? Useful Tips to Get You Started
The Truth About Forex Education
Swapping Forex trades
Forex: Understanding the Core Elements
Forex and its fear
Forex Buy Sell Signal
The Forex Options and Futures Are Similar Contracts and Have Very Thin Line Differences.
Back testing and its link with Forex
Face the Truth of Forex Trading
Forex Trading: Ways To Increasing Your Profits
Forex Trading: Systems, Signals, Robots and Brokers
Forex Trading Strategies: How To Make Money In The Forex Market
Forex Trading Tips - Profit With Bollinger Bands
Forex Pyramids: Not less than a wonder!
Forex trading Good but not easy!
Forex Pips in Profits and Losses
Interpreting Candlestick Chart Patterns
Scalping in the FX Market
How To Make Forex Education Work For You
What A Good Forex Blog Can Do For You
Market Cycles Explained
Why Some Traders Go For Managed Forex Trading
Best Forex Trading Hands Down
How To Trade Forex?
A New Approach to Forex Affiliation
Forex Indicators: Bollinger Bands and Fibonacci Retracements
The Need For A Forex Trading System
